HB278 Alabama 2013 Session

Summary

Primary Sponsor

Craig Ford

Independent

Co-Sponsors

Thad McClammyLaura HallJames E. BuskeyNapoleon BracyJohn RobinsonThomas JacksonRalph HowardGeorge “Tootie” BandyDavid ColstonMerika ColemanPebblin W. WarrenDexter GrimsleyJohnny Mack MorrowRod ScottBarbara Bigsby BoydElaine BeechMarcel BlackDarrio MeltonOliver RobinsonGreg BurdineJohn F. Knight JrLawrence McAdoryJohn W. Rogers

Session

Regular Session 2013

Title

Retirement, DROP reestablished, exceptions, Secs. 16-25-150, 36-27-170 am'd.

Summary

HB278 would reestablish the Deferred Retirement Option Plan (DROP) for eligible teachers and employees and remove caps on interest paid on DROP accounts.

What This Bill Does

It reopens DROP to new participants in the Teachers' Retirement System and Employees' Retirement System (and state police under a parallel section), and removes limits on interest that can be earned on DROP accounts. Eligible employees must have at least 25 years of service, be at least 55 years old (52 for state police) and earn $99,000 or less, and participation lasts 3 to 5 years as a one-time option. While in DROP, the member continues to work and contribute, and the retirement allowance is placed into a DROP account with interest credited at the same rate as active accounts; after completing DROP, the member withdraws and cannot work in local schools in a full or part-time capacity.

Who It Affects

• Members of the Teachers' Retirement System and Employees' Retirement System who are eligible and choose to participate in DROP or are affected by the removal of interest caps.
• State police members who are subject to the state police age requirement (52) under the parallel DROP provisions.
• Local school systems and retirement-plan administrators who manage DROP contributions, distributions, and related rules.

Key Provisions

• Reestablishes DROP for the specified retirement systems and allows new participation.
• Removes the interest cap on DROP accounts, allowing interest at the same rate as active accounts and adjusting post-2011 interest as specified.
• Sets eligibility: at least 25 years of creditable service, minimum age 55 (52 for state police), and salary of $99,000 or less.
• Participation lasts 3 to 5 years, one-time, with election elective options, and retirement benefits placed into a DROP account; voluntary termination early can forfeit part of the retirement allowance portion but not contributions.
• DROP accounts continue to accrue contributions from both employer and employee and do not incur DROP fees; no COLA is paid while in DROP.
• After completing DROP, members withdraw from service and cannot take local school-system employment; benefits resume with regular retirement rules.
• Election and participation follow uniform, nondiscriminatory procedures with specific timing windows; the act becomes effective after governor approval.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Retirement